Microsoft and Oracle have signed a new partnership under which key Oracle software will be authorized for use on Microsoft’s Windows Azure cloud service.

While elements of the agreement come down to promising to play nicely together in the future, some aspects are more concrete.

Microsoft will authorize Oracle's Database, Java, and WebLogic Server for Hyper-V and Azure, and Oracle will support customers who are doing so. Customers will be able to acquire Oracle software via Windows Azure, and you’ll be able to use your Oracle licenses on Azure.

Meanwhile, Oracle will make Oracle Linux available to customers using Windows Azure.

The announcement says the two companies will also work together to add properly licensed and fully supported Java into Windows Azure. Until now, Microsoft has offered open Java SDKs, according to Satya Nadella, Microsoft's president of Microsoft Corporation’s Server and Tools Business, adding:

"Now we have the licensed Java stack, plus the middleware stack, available. We think it makes Java more first class within Azure."

Talking about the partnership in a conference call, Microsoft CEO Steve Ballmer and Oracle President Mark Hurd were keen to emphasize the new-found friendly relationship, with Ballmer saying that a formal partnership is long overdue.

"It's about time and we're really glad we have a chance to work in this much newer and more constructive way with Oracle."

He added:

"I think both companies have always, at least many, many years have had respect for one another.”

This long standing mutual respect was shown by the fact that Oracle CEO Larry Ellison broke the news ahead of the joint announcement when he revealed Oracle's plans to cooperate with Microsoft, Salesforce.com and NetSuite in the cloud in a phone briefing about Oracle’s earnings.

The battle for the market for databases in the cloud seems to be hotting up. Oracle now has agreements in place with Microsoft for Azure and Amazon with AWS, while Rackspace has just announced more support for MongoDB on its cloud platform. The interesting question is what Google is doing behind the scenes.

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